S&P 500 gives up some inflation-led gains as Fed kicks off two-day meeting

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S&P 500 gives up some inflation-led gains as Fed kicks off two-day meeting

By Yasin Ebrahim

Investing.com -- The S&P 500 pared some gains Tuesday but remained supported as investors cheered fresh data showing easing inflation pressures for the second-straight month just as the Federal Reserve kicked off its two-day meeting.

The S&P 500 rose 0.6%, the  Dow Jones Industrial Average rose 0.1%, or 44 points, and the Nasdaq Composite rose 0.84%.

The Labor Department said Tuesday its consumer price index rose 0.1% last month after edging up 0.3% in October. For the year through November, the CPI increased 7.1%, marking the smallest increase since December 2021.

The lower inflation print isn’t likely to alter the Fed’s monetary policy decision expected on Wednesday, though it will likely spark debate among members on how much further to increase rates until reaching a peak.

“Overall, a smaller 50 bp hike is expected for the Fed’s meeting tomorrow, to be followed by another 50 bp over the first quarter next year before the Fed feels comfortable to pause the current cycle and reassess,” RBC said.

Expectations that the Fed could pause sooner rather than later pushed Treasury yields sharply lower, sparking a Meta-led surge in big tech.

Meta Platforms Inc (NASDAQ: META ) gained more than 4% followed by a 2% climb in Alphabet Inc (NASDAQ: GOOGL ) and a more than 1% in rise in both Apple Inc (NASDAQ: AAPL ) and Microsoft Corporation (NASDAQ: MSFT ).

Energy added to gains from a day earlier as oil prices were driven higher by ongoing supply constraints amid the closure of the Keystone pipeline supplying Canadian heavy crude to the U.S. Gulf Coast of Mexico.   

Halliburton Company (NYSE: HAL ) rallied more than 7%, while APA Corporation (NASDAQ: APA ) and Schlumberger NV (NYSE: SLB ) were up about 4% each.

In health care, meanwhile, Moderna (NASDAQ: MRNA ) jumped 1% after the drugmaker announced positive results from its experimental skin cancer treatment.

Pfizer (NYSE: PFE ), meanwhile, was up more than 2% as Goldman Sachs upgraded its rating on the stock to buy from neutral on expectations on expectations the firm's RSV, migraine, and sickle-cell disease drugs will drive growth in 2023.

The move higher in the broader market comes as some continue to warn of a downturn next year, driven by a deterioration in corporate earnings as margins come under pressure from a weaker consumer amid the impact of higher interest rates.

“As earnings projections deteriorate and the lagged effects of Fed’s actions began to set in a more concrete way, I think markets will turn down,” Phillip Toews, CEO & portfolio manager of Toews Asset Management, told Investing.com’s Yasin Ebrahim in an interview on Monday.

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